Broader + Deeper = Greater Savings in Energy Efficiency

This is part two in a three-part series published at RMI on Turbocharging energy efficiency programs.

The momentum for electric utilities to achieve high levels of energy efficiency savings has never been greater. Regulation has taken the lead. Utilities operating in seven states, for example, are required to meet more than 20 percent of their load in 2020 with energy efficiency programs.

Energy efficiency is a central ideal, if not the cornerstone, of Rocky Mountain Institute’s Reinventing Fire, a vision for an oil-, coal- and nuclear-free U.S. energy system by 2050. In fact, RMI believes that 40 percent of capacity can be replaced by energy efficiency.

To meet these ambitious goals, utility program managers are trying to adopt two strategies: seeking more breadth (total program customers) and going for more depth (savings per customer).

As illustrated in the figure above, if a utility wants to increase savings from 0.5 percent of total electricity demand to 2 percent, it could seek to either quadruple program participants or quadruple the savings per participant. Going solely for either strategy is a daunting task. But by pursuing both in combination, program managers are much more likely to meet their goals.

We found several tactics common among the utilities that are leading the way in energy savings. The leaders have incorporated many business process improvements into their programs that can be adopted by other utilities. Turbocharging presents best practices in four main categories:

Make marketing work

Improve sales execution

Drive down transaction cost

Embrace collaboration

Good marketing is a targeted message that compels a wide audience to invest in energy efficiency.

Improved sales execution adapts to customer demands and is open to new program ideas. Other sales-oriented businesses ask something akin to “do you want fries with that?” to create added sales. Utilities should do the same.

Driving down transaction costs finds ways to cut unnecessary expense and increases the productivity of program portfolios with faster and simpler audits, moving upstream to vendors and manufacturers, and using the web effectively to drive participation rates.

Embrace collaboration leverages the range of efficiency program stakeholders to embrace market transformation, get credit for codes and standards, and increase buy-in among regulators.

This is the second of three articles to be featured on RMI’s Outlet blog on Turbocharging Energy Efficiency Programs. The first article in the series was written by RMI consultant Mathias Bell and National Resources Defense Council staff scientist Dylan Sullivan.

As usual, RMI has done an excellent job of articulating the case for efficiency, and as usual, they have left out one critical ingredient in the solution set — robust public policies and regulations fostering efficiency.

Markets suffice, they do not optimize. So leaving it up to the market under the presumption they will act as rational agents and take advantage of all cost-effective opportunities is a form of folly that has been one reason the US is one of the least energy efficient economies in the developed world.

Market idolatry is the first recourse of the little mind, that needs ‘emotionally potent over-simplifications’ to stock their neuronal shelves. Chanting ‘Leave it to the Market’ over and over, as some sort of deracinated mantra, means, in reality, leaving it to the big concentrations of money power, who distort markets as surely as black-holes distort space-time. Leaving it to the market means begging for mercy from ‘Them’, the 0.01% who have distorted every market to their benefit and Our detriment, from that for real estate to that for trophy wives. Indeed I have not been able to update mine for some considerable length of time, my ‘market power’ being highly..ahem..attenuated.

As the average per person carbon output drops and the total number of humans on this earth increases how does that work out in terms of total fossil fuel amount added to the climate? Has anybody charted that out?

Efficiency is a great direction but it’s going to take more than this one trick pony to save us.

Laws and regulations can and do have unintended consequences. Consider the case of a local government who bemoaned all the incorrect times on clocks, but was aghast when the response to introducing a fine for being more than 5 mins out was; business taking the clocks down.

The market is nowhere near perfect, but is quite often fairly efficient. Bureaucratic answers to problems can create many more problems than they solve. Particularly as the Public Service is more concerned with not getting it wrong, rather than getting it right. Timeliness does not come into it, cent perfect but weeks late is fine.

You are correct that the current situation could be improved by the mechanisms you mentioned. But it has not happened and is not going to happen and ‘market failures’ are becoming more prevalent and damaging. Why? Because the 0.01% are using their money power to buy politics en bloc and get their servants to rig the economy to their advantage. Cut ‘em off at the ankles, financially speaking, redistribute their ill-gotten wealth, and market efficiency will grow.